Goldman Sachs report states that Li Auto Inc (02015) exceeded expectations in the third quarter of this year. The management believes that the government's policy of trading in old vehicles for new ones is proving effective, so they do not plan to adopt an aggressive sales policy in the fourth quarter, hence the guidance on sales volume is relatively conservative. Due to the continuous reduction in supply chain costs, improvements in component production and factory efficiency, the management expects the autos gross margin in the fourth quarter of this year and in 2025 to exceed 20%.

In addition, Li Auto Inc has significantly improved its autonomous driving performance this year and plans to further update users at the end of the year, which will continue to drive the production mix of the Max version.

The bank pointed out that the management's target is to double the sales volume of new energy vehicles (NEV) above 200,000 RMB in the overall market by 2025, with an expected growth rate between 15% and 20%. This means that the sales growth rate of Li Auto Inc is expected to be between 30% and 40%.

Considering the weak sales in October for Li Auto Inc, Goldman Sachs has lowered its net profit forecast for 2024-2026 by 4%-5%. Based on DCF valuation, the target price is reduced by 5% to 140 Hong Kong dollars. The "buy" rating is maintained.